Obama Swaps Cap-and-Trade for a Clean-Energy Goal

In Tuesday’s State of the Union address, President Obama emphasized developing and deploying clean-energy technology as part of an effort to improve American competitiveness and create jobs. Rather than promoting a cap-and-trade system for creating a market for clean energy—an approach that failed in the Senate last year—he suggested a goal that 80 percent of the electricity in the United States come from such sources as solar, wind, nuclear, “clean” coal, and natural gas.

The approach to energy policy is a marked shift from the one the president has supported since taking office. Previously he’d focused on taking measures to reduce greenhouse-gas emissions. He supported a bill that passed the House in 2009 that included a cap-and-trade system ( where the government sets limits on greenhouse-gas emissions, and emitters can purchase and trade for emissions allowances). A similar bill in the Senate did not pass, and cap-and-trade is widely considered to be off the table, at least for the next two years, now that Republicans who oppose it have control over the House. In Tuesday’s speech, Obama didn’t mention climate change or limits on greenhouse emissions—but employing the clean energy sources he mentioned would reduce carbon emissions.

The shift away from cap-and-trade is likely meant to appeal to Republicans, many of whom have supported nuclear power and clean coal, which refers to a variety of technologies for capturing or eliminating the emission of carbon dioxide and other pollutants from coal combustion. Some Republicans have called for a nationwide clean-energy standard, requiring utilities to use cleaner electricity sources. “The president has put a lot of stock in clean energy when it comes to job creation, and it’s an area where there might be some room for bipartisan movement in this Congress,” says Tony Kreindler, the media director for climate at the Environmental Defense Fund.

Many business leaders support the creation of a long-term energy policy as a way of clarifying the regulations that companies are likely to face in coming years. “What we’re hearing from our members is, we need policy certainty,” says William Booher, executive vice president of the Council on Competitiveness, an industry group. He says companies need a clear policy to be confident in where they invest the cash they’ve accumulated in recent years.

A fact sheet issued by the White House clarified that the 80 percent clean-energy goal would be a “standard”—presumably similar to the renewable energy standards in many states that require utilities to include a certain percentage of renewable sources in the power-generation mix. The standard will be accompanied by “new efforts to promote energy efficiency.” Obama’s 80 percent goal is likely achievable, especially if natural gas can be considered “clean energy.” (Burning natural gas releases about half the carbon emissions as burning coal, and it emits significantly fewer pollutants such as mercury.) Today, coal provides roughly half of the electricity in the United States.

In spite of likely support from some Republicans, passing a clean-energy mandate could be a challenge, as Republican leaders focus on reducing government spending and regulations. In a response to the State of the Union address, Rep. Fred Upton (R-Michigan), the chair of the House Energy and Commerce Committee—which will shape energy bills in the House—said he opposed policies that would “force consumer and job creators to purchase energy they cannot afford.” Clean-energy technology can be significantly more expensive than sources of electricity like conventional coal-fired power plants.